A Spatial Analysis of the Distributional Effects of Water Quantity Management

Publisher: Department of Applied Economics and Statistics, University of Delaware, Newark, DE.

Date Issued: 2001-04

Abstract: Water supply managers in growing areas must address increasing demand for an
essentially fixed, though highly variable, resource. This worldwide problem inevitably arises as demand increases with population and standards of living (Loucks 1999, Mayor 1997). Currently, 505 million people live in water-scarce or water-stressed conditions, and this number could rise to 3.2 billion people by the year 2025 (Dunphy 2000). Water-stressed locations are not necessarily arid regions of the world. Nonporous materials in urban and suburban areas prevent rainwater from percolating through the soil. Excess water becomes runoff, which erodes riverbeds, prevents groundwater recharge, and exacerbates water supply issues. Spatially, suburban growth distributes the demand for water over a greater area. Water delivery requires increasingly more infrastructure, including holding tanks, reservoirs, treatment plants, and pumping stations. At the very least, suburban growth adds miles of new piping to the system and requires a tremendous amount of water to keep the lines full. This paper investigates the relationship between the spatial distribution of the residential population and residential water demand. Specifically, three water quantity management strategies are compared in times of deficit.
Conservation is the root of demand-side management. However, conservation
has many interpretations. Chesnutt and Beecher (1998) describe ecological,
hydrological, traditional-economic, and resource-economic perspectives on
conservation. The ecological perspective emphasizes ethical constraints to avoid the consequences of over consuming in a common property setting. The hydrological perspective focuses on the water cycle and engineering solutions to maintain water supply. Water allocation efficiency through pricing guides the traditional-economic perspective, while the resource-economic perspective merges a sustainability criterion with the traditional perspective. Any attempt to implement water management policy will undoubtedly satisfy those with one perspective and offend others. For instance, objections to the use of price arise from those who see it as insufficiently addressing ethical or supply concerns. This paper attempts to address such concerns by examining the distributional and supply impacts on residents when water scarcity pricing is implemented.